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More frequencies set to be auctioned in Taiwan

Category: Policy and Regulation

Publishing Date: April 20, 2017

The government is scheduled to release more frequency bands for the further development of 4G telecom services through a public auction in mid-October, the National Communications Commission (NCC) said yesterday, adding that this time there would be a mechanism to expedite the auction process.

This would be the third auction for 4G telecom operators. The first was in 2014, which attracted five qualified bidders and generated NT$118.65 billion (US$3.9 billion at the current exchange rate) in revenue, about three times higher than the floor price.

The second auction, held in 2015, made more than NT$27.95 billion, about two times higher than the floor price.

The floor price for this year’s auction is NT$20 billion, the commission said, adding that it would not make any projections on the potential revenue this year.

Telecommunications industry experts estimate that the revenue could top NT$50 billion.

“Our focus is on the efficient and harmonious use of frequency bands. Telecom carriers should not transfer the costs of acquiring frequency bands to their users,” NCC spokesperson Wong Po-tsung (翁柏宗) said.

Based on the NCC’s plan, a total of 150 megahertz (MHz) of bandwidth are to be auctioned, including those in upstream and downstream frequency bands.

Among them, 120MHz are in the 2,100MHz frequency band and 30MHz are in the 1,800MHz frequency band.

Currently, the 2,100MHz frequency is used to provide 3G services. The 3G license is due to expire on Dec. 31 next year.

The 1,800MHz frequency is used by 4G and 2G services.

The 2,100MHz block is to be divided into 24 blocks, and the 1,800MHz block is to be divided into six frequencies. Each block consists of 5MHz of bandwidth.

Unlike in previous auctions, in which telecoms bid directly for the blocks at a specific locations in the band, the commission said that this auction would be conducted in two stages.

Each telecom bids for the number of blocks it hopes to acquire during the first stage, then they can negotiate for the specific blocks on the band.

Should negotiations fail, the telecoms could determine which frequency they acquire by participating in another auction.

The new method is designed to avoid disputes, such as those that arose after the first auction, in which Taiwan Mobile acquired the frequency block that Far EasTone Telecommunications Co Ltd was using and vice versa.

While Far EasTone returned the block and the NCC reassigned it to Taiwan Mobile, Taiwan Mobile did not return the block that Far EasTone bought until after a bitter legal battle.

The commission said that it would accelerate the auction this time after 200 rounds, because previous auctions have gone on for at least one month.

Meanwhile, Wong said that the market has yet to see the mature development of the voice over long-term evolution (Volte) technology and telecoms are using the 2,100MHz frequency band to serve 3G service subscribers and voice communication service for 4G subscribers, he said.

“We will try to let 3G telecoms keep the frequency blocks they are using at the moment,” he said.

Telecoms cannot acquire more than one-third of the total bandwidth released this year, the commission added.

Some said that the system could be abused by companies increasing the bidding price for competitors and by buying one frequency block and not using it.